A King of Real Estate, Fallen on Harder Times

Through the real estate boom, few new developers filled the city with luxury condominiums as fast as Shaya Boymelgreen. He turned Wall Street corner offices into minimalist bachelor lairs, built TriBeCa apartments snapped up by celebrities like Gwyneth Paltrow and crowded the edges of Park Slope, Brooklyn, with condos.

But Mr. Boymelgreen, 58, has since retreated mightily from the limelight as his fortune has reversed.

He is battling a bankruptcy filing against one of his companies, eviction from his Brooklyn headquarters — a judge ruled Tuesday morning that the proceedings could move forward early next year — and the seizure of a Queens theater in what the buyer calls a “friendly foreclosure.” Condo owners are filing lawsuits over his construction. He has cut his staff from 200 to 15, his spokeswoman says, and several former co-workers report that the five of his eight children who are in the family business are looking for other employment opportunities.

Mr. Boymelgreen arrived in New York City from Israel in 1969 and worked in asbestos removal before getting involved in small development projects. His break came in 2001, when he met the diamond magnate Lev Leviev on a Lubavitcher-sponsored cruise, and the two became business partners.

Mr. Boymelgreen went on to build over 2,400 apartments in New York City and expanded into more than a dozen countries.

As his star rose in the real estate world, so did his public profile. Mr. Boymelgreen regularly appeared at construction sites with his hulking driver, entertained workers at his lakefront compound upstate and hosted real estate executives at a martini-infused private concert by John Legend.

“This guy was headed to be the next Robert Moses,” said Howard L. Zimmerman, an architect whose firm was hired by residents of three of Mr. Boymelgreen’s Brooklyn buildings to address construction problems. “He just flamed out. I don’t think he had the infrastructure to sustain the growth.”

For his part, Mr. Boymelgreen has said little about his troubles and has kept his message upbeat. “We’re dealing with the problems we have as serious and worthy of our full attention,” he said in a statement. “Setbacks are difficult and regrettable, but when you lose your confidence you’ve lost all.”

Sara Mirski, managing director of development for Mr. Boymelgreen, maintains that he will develop the Queens theater site along with properties on West 23rd Street, upstate and in Texas. He is just waiting for “when financing is available,” she said.

But the developer Sam Suzuki said that his lawyers were drafting a contract to buy the theater property’s mortgage from the bank, that he was doing due diligence on the property and that he planned to close early next year.

Meanwhile, a recent condo project at 20 Pine Street remains entangled in a dispute with Mr. Leviev’s company, Africa Israel USA, over construction responsibilities, said Richard A. Marin, the company’s chief executive. Relations between Mr. Boymelgreen and Mr. Leviev have been sour since a split in 2007.

LibertyPointe Bank, which Mr. Boymelgreen founded in 2005, received a cease and desist notice from the Federal Deposit Insurance Corporation in July, ordering it to halt some of its current business, like commercial real estate loans. The bank’s president, Merton Corn, said it was working to collect on the troubled loans and had not been making any new ones.

On Friday, the F.D.I.C. gave the bank 30 days to raise cash. Mr. Corn said that he hoped to raise the necessary capital and that he had “a couple of prospects.”

Mr. Boymelgreen also faces criticism from residents of his earlier projects. Gus Sheha, who lives at 402 Main Street, a 20-unit building in Brooklyn’s Dumbo neighborhood, said residents have spent $250,000 on repairs since 2003 — including work to connect the building’s waste line to the city’s so that sewage would stop flowing into the street.

Mr. Sheha said that in 2005 Mr. Boymelgreen offered the building’s residents a $250,000 settlement if they agreed to sign a waiver releasing him from liability for any new problems; they turned him down.

Ms. Mirski, the spokeswoman for Mr. Boymelgreen, would not comment on any settlement at 402 Main Street, but said that lately many condo boards had been seeking settlements, which she attributed to “a reduction in common charge income resulting from foreclosures or delayed or nonpayment by residents.”

Residents of the 173-unit Newswalk building, a former Daily News printing plant in Prospect Heights, Brooklyn, that Mr. Boymelgreen finished converting into condos in 2002, have spent $5 million in repairs and legal fees to address structural problems, said Michael Rogers, a member of Newswalk’s condo board. He said that the building had so many leaks that some of its original concrete beams had started to fall apart.

“This was a really solid building,” Mr. Rogers said. “The construction is so poor. It’s construction that could have hurt people.”

Mr. Boymelgreen’s handling of criticism did not help, residents and lawyers say. While many developers have had similar problems in new buildings, Mr. Zimmerman said, Mr. Boymelgreen stood out because he fought against taking responsibility for repairs.

When Mr. Zimmerman met with Mr. Boymelgreen and his staff about the problems in three Brooklyn buildings, he said, the developer repeatedly argued, “What do they expect — a Manhattan building?”

Ms. Mirski disputed that account and said, “Codes and professional standards of workmanship are the same in any borough or locale.”

Then there is the convoluted eviction battle: Henry Weinstein, who owns a Prospect Heights building that Mr. Boymelgreen leases, and where he has his office, sued Mr. Boymelgreen in 2003 for selling the lease on the building to the Atlantic Yards developer, Forest City Ratner. The office is located within the Atlantic Yards site.

But hours before Mr. Weinstein was to evict Mr. Boymelgreen, Henry Herbst — whose company installed telecommunication systems in Mr. Boymelgreen’s projects and who also had his offices in the building — filed bankruptcy proceedings against Mr. Boymelgreen, according to public records and interviews with Mr. Herbst and Mr. Weinstein’s lawyer, David Brody. Mr. Herbst said he feared losing his office and the offices he sublet to other companies.

“He refused to go into bankruptcy,” Mr. Herbst said. “So we put him into bankruptcy.”

Mr. Boymelgreen’s defenders pointed out that most people in the real estate industry are struggling these days. Eric Kogan, a contractor who handled the dry wall and carpentry for several projects, said that he “feels so bad” that his former boss is in trouble. Lacking what had been steady work from Mr. Boymelgreen, Mr. Kogan said, he bought a Subway sandwich franchise on West 41st Street to support his family.

“Look at me,” he said, working the cash register at his shop. “I used to do sky rises. Now look at what I’m doing.”

Former co-workers say that Mr. Boymelgreen should be judged by his achievements, not his current setbacks. Edan Shiboleth, who worked with him until earlier this year as director of finance and investment, described his former boss as a man who “came here penniless and established an empire.”

And Mr. Boymelgreen has not forgotten his roots, he said. During the boom, he remained in the semi-detached brick home in Crown Heights, Brooklyn, where he raised his family, and he has told his children that the family did not need any more money, Mr. Shiboleth said. He expects Mr. Boymelgreen will be fine.

“Like a Trump, like a Macklowe, they continue to keep growing,” Mr. Shiboleth said. “They don’t stop, ever.”